Erkinov Sh.B.

senior lecturer
University of Economics
Uzbekistan, Tashkent
Rakhimov U.F.
senior lecturer
department of corporate economics and business analytics
Tashkent State University of Economics
Uzbekistan, Tashkent

MARKET SEGMENTATION AS ONE OF THE FACTORS FOR AN

EFFECTIVE INCREASE IN SALES (THE CASE OF THE PASSENGER
VEHICLE MARKET OF THE RUSSIAN FEDERATION)

Annotation: The problems of market segmentation are key in organizing

marketing work. In almost all types of marketing activities, the analysis of
market segments is used and affects the results of all ongoing work. The
successful solution of market segmentation issues by the firm will lead to an
increase in sales, and, accordingly, the company's income. Making a profit is
the main goal of any commercial organization.
Every seller knows that the buyer should benefit from the purchase of
goods. Then he will buy the product again and again. Direct marketing efforts
aim to increase the buyer's knowledge of these benefits. But what benefits are
buyers looking for in the product? How to understand customer needs? And how
many buyers with similar needs are in the market? Segmentation provides
answers to these and many other questions about the needs and desires of
customers. At the same time, every firm operating in the market is aware that its
products or services cannot fully satisfy the needs and desires of all consumers.
Ideally, the firm will try to occupy all market niches (segments) to maximize
profits. In fact, she conducts market research and as a result focuses her
"attention" on certain segments of the market where her product will bring the
maximum income it is quite obvious that different consumers want to buy
different products.
Keywords: segmentation, targeting, market placement, geographic
segmentation, demographic segmentation, psychographic segmentation,
behavioral segmentation

1. INTRODUCTION
In order to successfully operate in the market and achieve its goals, each
company chooses its own marketing strategy. There are three marketing
strategies: mass marketing, product differentiation marketing and target
marketing. Before proceeding directly to the definition of market segmentation
and classification, each of these strategies should be briefly described.

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 Mass marketing. In mass marketing, the seller is engaged in mass
production, mass distribution and mass promotion of the same product for all
buyers at once. The main argument in favor of mass marketing is that with such
an approach, production costs and prices should be reduced as much as possible,
and the largest potential market should be formed. An example is the world-
famous Coca-Cola company today, which at first produced only one drink for
the entire market in the hope that it would appeal to everyone.
Product-differentiated marketing. In this case, the seller produces two or
more goods with different properties, in different designs, of different quality, in
different packaging, etc. Today, the Coca-Cola company produces several soft
drinks in different packages of different capacities. These products are designed
to create variety for customers.
Target marketing. In this case, the seller distinguishes between market
segments, selects one or more of them, and develops products and marketing
mixes based on each of the selected segments. Today, Coca-Cola launches the
Tab drink to meet the needs of diet-conscious consumers.
Today, firms are increasingly shifting from mass and product-
differentiated marketing techniques to targeted marketing techniques that help
salespeople better identify available marketing opportunities. For each target
market, the seller can develop a product that is needed for this market. To ensure
effective coverage of each such market, he may vary prices, distribution
channels, advertising efforts. Instead of dispersing his marketing efforts, he can
focus them on the buyers most interested in purchasing the product. Target
Marketing Requires Three Key Activities

1. Market Segmentation 2. Market Goals 3. Market Placement

• Determining the basis for • Development of • Development of

market segmentation measures to attract the consumer group profiles
• Designing a segment segment • Development of a
view • Selecting target segments marketing mix for each
segment
Figure №1. Target marketing in the enterprise

The first is market segmentation - the breakdown of the market into clear
groups of buyers, each of which may require separate products and / or
marketing mixes. The firm determines different ways to segment the market,
profiles the resulting segments and evaluates the degree of attractiveness of each
of them.
The second is the choice of target market segments - the assessment and
selection of one or more market segments to enter them with their products.

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 The third is product positioning in the market - providing the product with
a competitive position in the market and developing a detailed marketing mix.
Before considering the issue of market segmentation, it is advisable to
classify them. In marketing, the market is understood as the totality of all
potential consumers who are in need of goods in a particular industry and are
able to satisfy it. Depending on the type of consumers, the following types of
markets are distinguished: the consumer market and the markets of
organizations. The latter are subdivided into markets for production and
technical purposes, markets for resale and markets for government institutions.
With such an abundance of markets, it is obvious that when conducting market
segmentation, one or another of its features must be taken into account, and the
uniqueness of products sold in different markets should be taken into account.
2. THEORETICAL ASPECTS OF RESEARCH.
As an introductory word, it is appropriate to recall the Pareto law ("80:20
law"), according to which only 20% of buyers bring the company 80% of the
income, representing a generalized group of the company's target customers.
The company also focuses its products on them ("shooting at targets"). This
strategy of market activity seems to be more effective. In essence, this is market
segmentation. Market segmentation is the division of markets into clear groups
of buyers (market segments) that may require different products and for which
different marketing efforts need to be applied.
A segment is a group of consumers characterized by the same type of
reaction to the proposed product and to a set of marketing incentives.
Segmentation of the market by groups of consumers is a grouping of consumers
according to some characteristics that, to one degree or another, determine the
motives of their behavior in the market.
Market segmentation by product groups is a derivative of market
segmentation by consumer groups, takes into account the needs and preferences
of consumers in terms of the quality characteristics of the product (goods,
services). Segmentation by enterprises (competitors) is a grouping of
competitors according to competitiveness factors in moving to the market.
Market segmentation by consumers, by products and enterprises
complement each other and all the results obtained are considered as a whole,
which allows you to choose the most effective market segment correctly.
Market segmentation by product parameters. Product segmentation is
important when planning the release and marketing of new products, as it allows
you to analyze which particular characteristics of a particular product may be
attractive to the consumer and how much your competitors have taken care of
satisfying the wishes of customers when developing their products. At the same
time, it is necessary to determine, firstly, for which user groups this product is
intended and for what purposes it can be used, and, secondly, what functional
and technical parameters of the product are of key importance for specific
consumers, and on the improvement of which it is necessary to work. The tasks

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can be solved by the method of single-factor or multi-factor models. A multi-
factor segmentation model occurs when product models are classified according
to a combination of several characteristics at the same time, for example,
technical characteristics, price level, service provided, manufacturer's
warranties, distribution channels, and the perception of the level of these
characteristics by consumers in various product models is assessed.
The first step in segmentation is the selection of segmentation criteria. At
the same time, it is necessary to distinguish between the criteria for segmenting
markets for consumer goods, industrial products, services, etc. Thus, when
segmenting the market for consumer goods, criteria such as geographical,
demographic, socio-economic, psychographic, behavioral, etc. are used.
The main features of segmentation by product groups are functional and
technical parameters, price, etc.
Geographic segmentation - dividing the market into different geographical
units: countries, regions, regions, cities, etc.
Demographic segmentation - dividing the market into groups depending
on consumer characteristics such as: age, gender, marital status, family life
cycle, religion, nationality and race.
Socio-economic segmentation involves the division of consumers by
income level, occupation, level of education.
Psychographic segmentation - dividing the market into different groups
depending on the social class, lifestyle or personal characteristics of consumers.
Behavioral segmentation involves the division of the market into groups
depending on such characteristics of consumers as: level of knowledge,
relationship, nature of using the product or reaction to it.
In accordance with the relationship, segmentation is distinguished: by the
circumstances of use, based on benefits, based on the status of the user, based on
the intensity of consumption, based on the degree of loyalty, based on the stage
of readiness of the buyer to make a purchase. Segmentation by circumstances of
use - dividing the market into groups in accordance with the circumstances,
reasons for the emergence of an idea, purchase or use of a product. Benefit-
based segmentation is the division of the market into groups depending on the
benefits that the consumer is looking for in the product.
User status characterizes the degree of regularity in the use of a product
by its users, which are divided into non-users, former users, potential users,
novice users and regular users.
Consumption intensity is an indicator on the basis of which markets are
segmented into groups of weak, moderate and active consumers of certain
products. Obviously, it is more profitable to serve one market segment
consisting of a significant number of active customers than several small
segments of weak customers.

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 The degree of loyalty characterizes the degree of loyalty, commitment of
the consumer to a particular brand of product, usually measured by the number
of repeated purchases of the product of this brand.
The buyer readiness stage is a characteristic according to which buyers are
classified into ignorant and knowledgeable about the product, interested in it,
willing to buy it, and intentional to buy it.
When segmenting the market for production and technical purposes, the
following criteria are primarily used: geographical location; type of organization
acquiring goods: amount of purchases; directions of use of the purchased goods.
Segmentation can also be carried out with the sequential application of
several criteria. It is important that the segments are not too small, i.e.
unfavorable for commercial development. An example is the segmentation of
the aluminum consumer market.
Marketing segmentation reveals the possibilities of various market
segments in which the seller has to act. After that, the company will have to
decide:
1) how many segments should be covered;
2) how to determine the most profitable segments for it.
Differentiated Marketing. In this case, the company decides to act in
several market segments and develops a separate offer for each of them. By
offering a variety of products, the firm hopes to achieve sales growth and deeper
penetration into each of its market segments. Moreover, it expects an increase in
repeat purchases, since it is the company's product that corresponds to the
desires of consumers, and not vice versa.
Concentrated Marketing. Many firms also see a third marketing
opportunity that is especially attractive to organizations with limited resources.
Instead of concentrating efforts on a small fraction of a large market, a firm
concentrates efforts on a large fraction of one or more submarkets. There are
several examples of such concentrated marketing. For example, a manufacturer
of computers and office equipment has released expensive calculators. Through
concentrated marketing, the firm secures a strong position in the segments it
serves, because it knows the needs of these segments better than others and
enjoys a certain reputation. Moreover, as a result of the specialization of
production, distribution and promotion measures, the firm achieves economies
in many areas of its activities.
At the same time, concentrated marketing is associated with an increased
level of risk. A chosen segment of the market may not live up to expectations, as
happened, for example, in Europe, when young women stopped buying
sportswear and switched to classic suits. Or it may happen that a competitor
wants to infiltrate your chosen market segment. Given these considerations,
many firms choose to diversify their soy business into several different market
segments.

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 Choosing a market coverage strategy. When choosing a market coverage
strategy, the following factors should be considered:
1. Company resources. With limited resources, the most rational strategy
is differentiated marketing.
2. The degree of product homogeneity. An undifferentiated marketing
strategy is suitable for uniform products such as grapefruit or steel. For products
that may differ in design, such as cameras and cars, differentiated or
concentrated marketing strategies are more appropriate.
3. Stage of the product life cycle. When a company enters the market with
a new product, it is advisable to offer only one version of the novelty. At the
same time, it is most reasonable to use undifferentiated or concentrated
marketing strategies.
4. The degree of homogeneity of the market. If buyers have the same
tastes, they buy the same quantities of goods at the same time intervals, and they
respond in the same way to the same marketing stimuli, it is appropriate to use
an undifferentiated marketing strategy.
5. Marketing strategies of competitors. If competitors are engaged in
market segmentation, the use of an undifferentiated marketing strategy can be
disastrous. Conversely, if competitors use undifferentiated marketing, the firm
may benefit from using differentiated or concentrated marketing strategies.
3. METHODOLOGICAL ASPECTS OF RESEARCH.
The analysis of segmentation in the market of the Russian Federation,
regarding passenger cars, was carried out. The analysis was carried out both
light and light commercial vehicles to compare the segments. And also, an
analysis of the market segmentation of crossovers and SUVs was carried out. At
the same time, an analysis was made by markets on which vehicles more
Russians spent according to vehicle segments.
4. ANALYSIS AND RESULT OF RESEARCH.
Residents of Russia spent 3.05 trillion rubles on the purchase of new cars
in 2021. And this is a record figure in the history of our market. 71% of this
amount was spent on cars of mass brands, respectively, the remaining 29% - on
products of premium brands. Moreover, if we compare their sales in absolute
terms, the ratio will be 90% to 10%.

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 Premium
segment 29%

Mass segment
71%

Figure №2. Division of the passenger car market by brand positioning.

Last year, Russians paid the most money for cars of European brands,
spending 37% of the total on their purchase. A little more than a quarter (26%)
went to the "Japanese", one sixth (16%) - to the "Koreans", and the ninth (11%)
- to the cars of domestic brands. The remaining 10% were divided between the
"Chinese" and "Americans" (9% and 1% respectively).

European 1%
9%

Japanese 11%
37%
Korean

Russian 16%

Chinese

American 26%

Figure №3. Division of the passenger car market by brand origin

SUV remains the largest segment of the Russian market, so most of the
money was spent on crossovers and SUVs. But if “in pieces” SUV occupies
51%, then “in money” - 67%. The reason is the higher weighted average price of
cars in this segment than the market average.
A seventh of the money spent was spent on cars of the B segment. Even
less was spent on the rest of the inhabitants of the Russian Federation. Thus,
segment D had a share of 6% of the total financial capacity, segment E - 4%,
segment C - 3%. And for cars of other segments (pickup trucks, minivans,
coupes, convertibles, etc.), a total of 6% of the total amount was spent.

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 According to the results of January - June, sales of new cars in Russia
show growth both in the mass and premium segments. In the mass sales of cars
increased by 37% to 749.5 thousand units. However, four brands included in the
TOP-25 in terms of sales showed a negative trend. Chevrolet (-43.2%) and Lifan
(-32%) showed the largest drop in the first half of the year, Honda (-2.1%) and
Nissan (-1.6%) showed a slight decrease. At the same time, 21 brands are in the
"plus". The most rapid growth is in the German Opel (about 15 times), on a low
base of the previous period. The sales figures of Chery cars increased by 5.3
times, Peugeot and Haval - by 2.5 times, Geely and FAW - by 2 times. The sales
volumes of LADA, Suzuki, Subaru, Skoda and Сitroen increased in the range
from 50% to 100%. Mazda, Volkswagen, Kia, Renault and Hyundai increased
the number of cars sold from 25% to 50%. As for premium brands, car sales
grew by 41% to 84.5 thousand units. Strong growth is observed for all brands,
with the exception of Jaguar, whose sales have halved. The leader in terms of
dynamics is Cadillac, whose car sales grew by 125%. Doubled sales of Genesis.
Volvo (+83.4%) and Infiniti (+76.2%) increased them by more than 50%. Jeep
(+29.4%), BMW (+36.7%), MINI (+43.4%), Mercedes-Benz (+46.5%), Audi
improved their performance in the range from 25% to 50%. (+46.9%), Porsche
(+48.1%). We also note that the share of the premium segment was 10.1%.
Accordingly, the mass segment accounted for 89.9%.

6%
3%
SUV
4%

B 6%

D
14%
E

67%
C

Other

Figure №4. Division of the passenger car market by segment

At the end of 2021, 1.54 million new passenger cars represented by 270
models were sold in Russia. Over half of them accounted for crossovers and
SUVs. Thus, cars of the SUV segment last year were sold in the amount of
787.3 thousand units, which corresponds to a share of 51.3% of total volume. At

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the same time, crossovers and SUVs were represented by 153 models. It is also
worth noting that the share of SUVs for the first time exceeded the 50% mark.
Within the SUV segment itself, the SUV sub-segment (C) is the largest,
with a share of 25.5%. It is based on such models as Toyota RAV4, Volkswagen
Tiguan, Kia Sportage, and there are 52 of them in total. The SUV (B)
subsegment occupies 11.4% of the market and is represented by 18 models,
including Hyundai Creta, LADA Niva and Renault Duster.
Segment B is the second in terms of sales in the Russian Federation with a
share of 34.8%. Interestingly, it includes only 15 models, of which 534,000 units
were sold in total in 2021. Such cars remain the most affordable and popular in
our market. These are, for example, LADA Vesta and Granta, Kia Rio, Hyundai
Solaris, Volkswagen Polo, Skoda Rapid. In terms of the number of models,
segment B is inferior even to segments C and D (20 and 22, respectively),
although their market share is an order of magnitude lower.
At the same time, the market potential is much greater: if it were not for
the shortage of cars, the results of 2021 turned out to be much more positive.
The shortage is due to a shortage of electronic components, a break in supply
chains and rising prices for raw materials (primarily steel). So far, the situation
on the market is favorable only for dealers who enjoy unsatisfied demand and
compete in greed: monstrous extra charges for penny retrofitting, alas, have
become the norm. And the saddest thing is that buyers are ready to silently pay a
few hundred thousand (or even several million) rubles, just to get the coveted
new car.
As for the structure of the market, according to the AEB, 47% of the
demand fell on SUVs (788,000 cars). Light commercial vehicles sold 131
thousand (7.8% of the market), pickup trucks - 10 thousand (0.6% of the
market). And 1001 electric cars were bought from official dealers. Lada remains
the market leader, and we have already talked about its results. Kia, Hyundai
and Renault traditionally follow, with all three brands showing a 2% increase in
sales, although the shortage of cars also affected them. In the premium segment,
BMW is again in first place.
Chinese companies, which have no problems with the supply of
components, took full advantage of the current situation. Haval more than
doubled demand, Chery tripled, and Geely 59%. In terms of sales, they are
already on an equal footing with Mitsubishi and Mazda. And although dealers of
"Chinese" also do not shy away from markups, on average they are lower than
those of Korean brands. Not a single Chinese model was included in the annual
ranking of the top 25 best-selling cars, but in different months there were Geely
Coolray and Atlas, Haval Jolion and Chery Tiggo 7.
Market players do not expect a quick recovery in production and supplies:
at best, this will happen only by the end of 2022. Therefore, the forecast of AEB
and automakers for this year is a slight increase in sales by 3-5%. Unless, of

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course, new shocks happen. And we will publish more detailed results of 2021
with sales data for all brands and models.
5. CONCLUSION
Summing up, we can draw the following conclusion: one of the main
areas of marketing activity is market segmentation, which allows the
accumulation of enterprise funds in a certain area of its business. The firm may
not have enough resources to operate in its market. Therefore, the firm is
looking for a profitable segment that matches its resources and capabilities.
Market segmentation consists in dividing it into relatively clear groups of
consumers (market segments), which can be focused on different products and,
accordingly, require different marketing efforts. Properly selected segments
increase the profitability of the company. That is why the practical utility of
identifying profitable market segments is obvious.
The main methods and principles of segment marketing analysis were
considered on the example of the Russian Federation market, regarding
passenger vehicles. In reality, there are many more methods for defining a
market segment. The choice of the appropriate method is a difficult task that
each enterprise must solve independently, based on its goals, objectives and
capabilities. Segmentation has advantages and disadvantages, but it is
impossible to do without it, since in the modern economy each product can be
successfully sold only to certain market segments, but not to the entire market.
Market segmentation can be carried out using various criteria.
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